CompuGroup Medical AG Financial Report 1 January - 30 September 2015
Contents Key Events and Figures............................... 1 Management report.................................. 2 The CGM Group................................... 2 Course Of Business................................. 2 Results Of Group Operations.......................... 3 Report On Expected Developments..................... 6 Report On Opportunities And Risks...................... 6 Interim Statement of Financial Position................... 7 Interim Income Statement............................. 9 Interim Statement of Comprehensive Income............. 10 Interim Cash Flow Statement.......................... 11 Interim Changes in Consolidated Equity.................. 12 Explanatory Notes................................... 13 Additional Information................................ 24 Financial Calendar 2015/2016.......................... 24 Share Information................................... 24 Contact......................................... 24 Management Responsibility Statement................... 25
Key Events and Figures + Revised assumptions for the Gematik pilot project as well as certain hospital projects impact revenue and EBITDA with EUR 8 million in the third quarter 2015 + The Gematik project is investment in nature but reported as expense + Nation-wide roll-out of the Telematics Infrastructure in Germany expected to begin in the middle of 2016 + Reported revenue of EUR 125.7 million, unchanged from the third quarter 2014 + Reported operating profit (EBITDA) of EUR 20.8 million, down from EUR 23.2 million last year + Continued positive development in the US business with year-on-year growth in local currency + 2015 guidance adjusted to reflect the changed assumptions for the Gematik pilot project + Revenue EUR 541-546 million + EBITDA EUR 110-115 million + Underlying business expected to achieve a 3 percentage points margin increase in 2015 relative to 2014, in line with the goals of the cost improvement initiatives made last year 01.07.-30.09. 01.07.-30.09. 01.01.-30.09. 01.01.-30.09. EUR 000 2015 2014 Change 2015 2014 Change Revenue 125,736 125,834 0% 396,218 374,245 6% EBITDA 20,829 23,197-10% 79,016 68,450 15% margin 17% 18% 20% 18% EBITA 18,878 21,328 73,318 62,630 margin 15% 17% 19% 17% EPS (EUR) 0,10 0,21 0,60 0,43 Cash net income (EUR)* 12,991 17,966 53,712 43,513 Cash net income per share (EUR) 0.26 0.36-28% 1.08 0.88 23% Cash flow from operating activities 14,594 6,051 57,177 48,147 Cash flow from investing activities -11,973-16,133-45,742-57,003 of which equity acquisitions -3,558-7,450-26,947-34,024 Number of shares outstanding ( 000) 49,724 49,724 49,724 49,724 Net debt 341,953 328,586 341,953 328,586 * Cash net income: net income before minority interests plus amortization of intangible assets except amortization on in-house capitalized software. 1
Management report THE CGM GROUP CompuGroup Medical AG Group (CGM) develops and sells efficiency- and quality-enhancing software as well as information technology services exclusively for the healthcare sector. The company plays a leading role in the development of global e-health solutions and enjoys market leadership in Germany as well as in other key European countries. CGM s software products and related services are designed to support all medical and organizational activities in doctors offices, medical laboratories, pharmacies, hospitals and other provider organizations. Its information services for health insurance companies and pharmaceutical producers contribute towards safer and more efficient healthcare. The company s services are based on a unique customer base of doctors, dentists, hospitals and pharmacies, as well as other service providers in healthcare. CGM is currently represented with offices and employees in 19 countries. According to internal figures, CGM has software maintenance contracts in the HPS I segment (AIS and PCS) corresponding to approximately 250,000 healthcare professionals (doctors, dentists and pharmacists). Total reach across all segments is estimated at approximately 400,000 healthcare professionals. The Group had an average of 3,993 full-time equivalent employees during the third quarter of 2015 (previous year: 3,980). COURSE OF BUSINESS The following sections describe the main operational developments during the third quarter of 2015. Revised assumptions for the Gematik pilot project The contract for the Gematik pilot project was awarded in November 2013 and CGM has worked to develop and certify the necessary components and to test the Telematics Infrastructure and Electronic Health Card (egk) with 500 providers (doctors, dentists and hospitals) in the North-West region of Germany. Following changes in technical specifications during the project, the recent finalization of security profiles (by the Federal Office for Information Security), significantly increased demands for testing and certification procedures as well as interdependencies with other on-going projects in the same area (e.g. 5 contracts for a new generation of chip cards), the timeline for CGM s project has been extended and the project will also incur significantly higher costs than originally planned. These changes necessitate the reversal of previously recognized revenue (EUR -1.5 million booked in the third quarter 2015 vs. EUR +2.7 million in the third quarter 2014) and the booking of total current and expected future losses in the project in the EBITDA amount of EUR -7.8 million for the first nine months of 2015 (previous year: EUR +2.3 million), of which EUR -6.5 million was done in the third quarter (previous year: EUR +0.5 million). Despite the significant increase in implementation time and costs, the project is a success story for CGM, given the preconditions, with all deliverables to date completed according to agreed quantity, quality and timeline. CGM sees this project as a sound investment in future growth opportunities for the Group. The project and CGM s investments bring unique capabilities to CGM with a complete suite of end-to-end components, hardware and software, fully certified to relevant standards and ready in time for the planned start of the nation-wide roll-out of the Telematics Infrastructure in the middle of 2016. CGM will have a head start to other participants in the future market for IT infrastructure products and services for healthcare all over Germany, and will enjoy this leadership position with most investments already made and with technology challenges already mastered. The proposed German ehealth law and planned national roll-out of the Telematics Infrastructure Parallel to the on-going Gematik pilot project, the German federal Ministry of Health (BMG) has prepared a bill The ehealth Law (Gesetzes für sichere digitale Kommunikation und Anwendungen im Gesundheitswesen), where the mandatory national rollout and use of the Telematics Infrastructure and electronic health card is written into German law. On July 3rd, the bill was officially proposed by the German government to the Bundestag (Parliament). In the Bundestag, the bill has been transferred to the health committee (Gesundheitsausschuss) where a last public hearing was held on November 4th. The bill is scheduled to be voted in the Bundestag on December 2nd and in the current draft, it is written that the law will come into effect January 1st 2016. In its present form, the law contains clear deadlines and financial incentives/penalties to ensure the timely roll-out of the Telematics Infrastructure to an estimated 250,000 participants in healthcare all over Germany in the 2016-2018 timeframe. With a potential full rollout (est. start in the middle of 2016) CGM has the opportunity to sell new egk-compliant online access products, in particular to all existing ~64,000 customer locations in Germany. Even more important; the Telematics Infrastructure fits perfectly with CGMs strategy to provide more products and services to its customers, such as eservices, eprescriptions, elaborder, physician networks, online clinical pathways, hosting services etc. 2 CompuGroup Medical AG Financial Report for the period 1 January - 30 September 2015
Revised assumptions for certain hospital projects In the hospital information systems segment, the Polish market has to date contributed with high growth rates, driven in part by a larger CGM participation in the on-going national e-health project there. In 2014 and in 2015, the National Centre for Health Information Systems (CSIOZ), a Polish Ministry of Health entity that is involved in the development of an e-health environment for the country, awarded contracts to Hewlett Packard (HP) and to CGM to develop and implement a digital portal for collecting, analyzing and sharing digital health records across Poland. Additional costs and delays in these projects have resulted in certain revenue adjustments and the booking of cost provisions in the third quarter. In Switzerland, significant resources continue to be allocated to delivery projects for early adopters of the new software generation G3 from CGM. The most recent assessment of these projects has resulted in certain revenue adjustments and the booking of cost provisions in the third quarter. CGM expects this investment phase of G3 deployment to be completed by the end of 2015 and that the business in Switzerland will return to profitability thereafter. The combined effects of these project re-assessments are revenue adjustments of EUR -3.5 million in the third quarter of 2015 and the corresponding booking of EUR -1.5 million of extra cost provisions for expected future losses. Developments in the United States In the United States, the revenue side of the business has reached a turning point following the transition to a more subscription based business model and the ending of some legacy product lines during 2014. In local currency, revenue increased sequentially from USD 11.1 million in the second quarter 2015 to USD 11.3 million in the third quarter and was in local currency up 3 percent year-on-year. Due to the significant strengthening of the US dollar, reported revenue in the US grew 25 percent from EUR 8.1 million in the third quarter 2014 to EUR 10.2 million in the same period this year. RESULTS OF GROUP OPERATIONS Unless stated otherwise, all figures in the management report refer to the third quarter of 2015 and 2014 respectively, i. e. the three month period 01.07. 30.09.(Q3). Revenue Revenue in the third quarter of 2015 was EUR 125.7 million which is unchanged compared to the same period last year. Acquisitions give a 3 percent contribution to growth and organic contraction was -3 percent (-5 percent at constant exchange rates) due to the aforementioned one-off adjustments made to the German Telematics Infrastructure pilot project as well as certain hospital projects. In the HPS I segment, third quarter revenue was EUR 96.8 million compared to EUR 92.5 million in 2014. This corresponds to 5 percent growth. Acquisitions contribute EUR 5.7 million to revenue and organic contraction was -1 percent (-3 percent at constant exchange rates). Third quarter revenue in Ambulatory Information Systems (AIS) was EUR 75.1 million compared to EUR 71.2 million in 2014. This corresponds to 6 percent growth which corresponds to a flat organic development (-2 percent at constant exchange rates). Outside the Gematik pilot project, the AIS business had 4 percent organic growth (3 percent at constant exchange rates). Third quarter revenue in Pharmacy Information Systems (PCS) was EUR 21.7 million compared to EUR 21.3 million in 2014. This represents 2 percent growth of which all comes from acquisitions. The lower organic revenue development in pharmacy software comes from lower hardware sales in 2015 compared to last year. This is mostly driven by higher hardware and 3rd party software sales last year resulting from the announcement from Microsoft to cease support for Windows XP and Microsoft Office 2003 in 2014. HPS I revenue development (including acquisitions and exchange rate effects): 01.07.-30.09. 01.07.-30.09. 01.01.-30.09. 01.01.-30.09. EUR m 2015 2014 Change 2015 2014 Change Ambulatory Information Systems 75.1 71.2 6% 234.0 217.2 8% Pharmacy Information Systems 21.7 21.3 2% 66.5 58.1 15% SUM 96.8 92.5 5% 300.5 275.3 9% In the HPS II segment, the year-on-year revenue contraction in Hospital Information Systems (HIS) was -26 percent going from the third quarter 2014 to 2015. Adjusted for the revenue related to the REWE/DMS product areas, which were sold in 2014, the organic contraction was -19 percent. The weak revenue development is due to one-off project adjustments made in the third quarter only and the full year outlook for the hospital business remains unchanged. 3
Management Report Continued HPS II revenue development (including acquisitions and exchange rate effects): 01.07.-30.09. 01.07.-30.09. 01.01.-30.09. 01.01.-30.09. EUR m 2015 2014 Change 2015 2014 Change Hospital Information Systems 14.4 19.5-26% 51.3 56.1-9% SUM 14.4 19.5-26% 51.3 56.1-9% In the HCS segment, revenue was EUR 14.6 million in the third quarter 2015 which is 5 percent higher than the same period last year. HCS revenue development (including acquisitions and exchange rate effects): 01.07.-30.09. 01.07.-30.09. 01.01.-30.09. 01.01.-30.09. EUR m 2015 2014 Change 2015 2014 Change Communication & Data 4.4 4.5-2% 14.7 14.1 4% Workflow & Decision Support 7.3 5.9 25% 19.2 18.8 2% Internet Service Provider 2.8 3.5-18% 10.4 9.9 5% SUM 14.5 13.9 5% 44.3 42.8 4% Changes to currency exchange rates increased Group revenue by EUR 1.4 million going from the third quarter of 2014 to the third quarter of 2015. Profit In terms of operating profit consolidated EBITDA amounted to EUR 20.8 million compared to EUR 23.2 million in the third quarter of 2014. The corresponding operating margin was 17 percent compared to 18 percent in 2014. The main developments in operating expenses were: + Expenses for goods and services decreased EUR 4.9 million year-on-year with a gross margin of 83 percent, which is 4 percent higher than in the third quarter last year. This change is mainly driven by external research and development expenses related to the Telematics Infrastructure and Electronic Health Card (egk) pilot project in Germany. + Personnel expenses are up 6 percent from last year at EUR 62.4 million (third quarter 2014: 58.8 million). + Other expenses are EUR 3.8 million higher than last year at EUR 25.7 million (third quarter 2014: 21.9 million). This change is mostly related to provisions for expected future losses in the Gematik project as well as certain hospital projects. Depreciation of tangible fixed assets in the third quarter is mostly unchanged from last year at EUR 1.9 million. Amortization of intangible fixed assets is also unchanged at EUR 8.2 million. This is primarily driven by the amortization of intangible assets related to companies acquired during the last 12 months as well as adjustments to the useful life of intangible assets and changes in foreign exchange rates. Financial income decreased from EUR 10.4 million in the third quarter 2014 to EUR 2.0 million this year due largely to changes in currency exchange rates which lead to non-cash translation gains and losses on Group internal debt. The financial expense decreased from EUR -9.0 million in the third quarter of 2014 to EUR -6.6 million this year and is composed of the following items: 01.07.-30.09. 01.07.-30.09. 01.01.-30.09. 01.01.-30.09. EUR thousand 2015 2014 2015 2014 Interest and expenses on loans and financial services 4.2 8.5 11.8 18.0 Changes in purchase price liabilities -0.1 0.4 0.3 0.1 Translation loss on non-euro internal dept 2.8 0.5 3.4 1.4 Calculated interest on assets and construction (IAS 23) -0.3-0.4-0.9-0.9 SUM 6.6 9.0 14.6 18.6 4 CompuGroup Medical AG Financial Report for the period 1 January - 30 September 2015
After tax earnings came in at EUR 4.9 million in the third quarter of 2015, down from EUR 10.7 million in the third quarter of 2014. The tax rate was 18 percent in the third quarter this year compared to 27 percent in the third quarter of 2014. The different tax rates are mostly due to non-cash changes in deferred tax assets and liabilities, losses in tax free areas as well as changes in non-tax relevant currency conversion. Cash net income decreased from EUR 18.0 million in the third quarter 2014 to EUR 13.0 million in the third quarter 2015, corresponding to a Cash net income per share of 26 Cent (Q2/2014: 36 Cent). Cash flow Cash flow from operating activities during the third quarter of 2015 was EUR 14.6 million compared to EUR 6.0 million in the same period 2014. The changes compared to 2014 mainly come from the following positions: + Adjusted for non-cash earnings/expenditures and cash taxes, the gross cash flow from operations before change in working capital increased from EUR 10.6 million in the third quarter of 2014 to EUR 18.3 million in the third quarter this year. + Change in working capital gave a decrease in operating cash flow of EUR -3.8 million compared to EUR -4.6 million in the third quarter 2014. There was a significant positive cash flow contribution during the third quarter this year from a reduction in trade receivables, which essentially is a normalization of a special situation in the receivables area in the prior quarter resulting from delayed invoicing and cash collection in some business units who were in a migration phase to the new group wide ERP solution during the first six months of 2015. Cash flow from investment activities during the third quarter of 2015 amounted to EUR -12.0 million compared to EUR -16.1 million in the same period last year. During the third quarter of 2015, CGM s capital expenditure consisted of the following: 01.07.-30.09. 01.07.-30.09. EUR m 2015 2014 Company acquisitions -3.6-8.5 Purchase of minority interest and past acquisitions -1.1 0.0 Disposal of subsidiaries 0.0 0.0 Capitalized in-house services and other intangible assets -2.9-6.0 Capital expenditure in joint ventures -2.5 0.0 Office building and property -0.1-0.7 Other property and equipment -1.8-0.9 SUM -12.0-16.1 Cash flow from financing amounted to EUR 2.7 million in the third quarter 2015 (previous year: EUR 24.8 million) and relates to the net cash inflow from assumption and repayment of loans. Statement of financial position Since the statement of financial position from 31 December 2014, total assets increased by EUR 41.3 million to EUR 778.0 million as at 30 September 2015. The largest change to individual asset classes is a EUR 26.4 million increase in intangible assets resulting from company acquisitions during the last nine months. For all other assets there are only minor changes during 2015. Group equity was EUR 188.7 million as at 30 September 2015, up from EUR 177.8 million as at 31 December 2014. The increase in equity comes after consolidating EUR 30.0 million in net profit for the period from 01 January 2015 to 30 September 2015 less EUR -17.4 million in dividend payment and EUR -1.7 million from the equity effect from changes in currency exchange rates and change in interest rates (actuarial gains and losses from pensions). The equity ratio is at 24.3 percent as at 30 September 2015. The biggest changes to liabilities are increases in long and short term debt of EUR 10.2 million and a EUR 14.2 million decrease in current non-financial liabilities mostly related to seasonal pre-payments of software maintenance contracts balanced under other liabilities. Research & Development Under IAS 38, development work on internally generated software must be capitalized if certain criteria are fulfilled. This generated EUR 3.9 million additional operating profit for the Group during the third quarter of 2015 (previous year EUR 2.9 million), less amortization and write-downs of EUR 0.5 million during the same period (previous year EUR 0.6 million). Most of the capitalized software development expenses are accounted for by two projects, G3.HIS (new HIS system development) and G3.AIS (new AIS software generation). Upon completion, the software will be amortized based on its useful life. 5
Management Report Continued REPORT ON EXPECTED DEVELOPMENTS The investments in the German Telematics Infrastructure project have increased during 2015. Due to the fact that these investments are reported as expense, CompuGroup Medical adjusts the 2015 guidance as follows (change in Gematik project assumptionsfor 2015: revenue minus EUR 10 million, EBITDA minus EUR 8 million): + Group revenue is expected to be in the range of EUR 541 million to EUR 546 million. + Group operating income (EBITDA) is expected to be in the range of EUR 110 million to EUR 115 million. Due to the changes in the Gematik project, revenue in the HPS I segment is expected to be in the range of EUR 405 million to EUR 410 million (down from previous guidance EUR 415 million to EUR 421 million). + AIS revenue is expected to be in the range of EUR 314 million to EUR 318 million (down from previous guidance EUR 324 million to EUR 329 million, reflecting the lower expected revenue from the Gematik project). + PCS revenue is expected to be in the range of EUR 91 million to EUR 92 million (unchanged to previous guidance). Revenue in the HPS II segment is expected to be approximately EUR 73 million (unchanged to previous guidance low end of initial range). Revenue in the HCS segment is expected to be approximately EUR 63 million in 2015 (unchanged to previous guidance high end of initial range). In terms of profitability, the operating margin (EBITDA margin) expected to be in the range of 21-22 percent (unchanged to previous guidance). Depreciation of fixed assets is on Group level expected to be approximately EUR 8 million in 2015 and amortization of intangible assets is expected to be approximately EUR 34 million, of which EUR 30 million will come from amortization of purchase price allocations related to past acquisitions. The corresponding Group earnings before interest and tax (EBIT) is in 2015 expected to be in the range of EUR 68 million to EUR 73 million. The foregoing outlook is given as at November 2015 and does not include revenue and costs associated with potential and currently undetermined further acquisitions during 2015. The outlook for 2015 represents management s best estimate of the market conditions that will exist in 2015 and how the business segments of CompuGroup Medical will perform in this environment. The Gematik pilot project is a recent example of CGM s commitment to the German electronic health card and Telematics Infrastructure. CGM is positioned to play a leadership role both in the implementation of the new infrastructure and in the corresponding provision of new products and services in the network. With the ehealth law coming into effect in 2016, the investments made in this area are expected to transform into the largest growth opportunity in company history. Germany is the largest economy in Europe and CGM is already perfectly positioned as the clear market leader in software for ambulatory care, a position consistently build over more than 25 years. Furthermore, as the infrastructure is seamlessly deployed, it will significantly extend the reach of already existing connectivity services from CGM. In addition, it will open a large market for new ehealth products and services where CGM can build on its position as the leading provider of information technology in German healthcare with by far the largest installed base of users. CGM is confident that this development will lead to similar and significant new business areas also in other European markets. REPORT ON OPPORTUNITIES AND RISKS As an internationally operating company, CompuGroup Medical is subject to variety of different risks. These risks mainly include strategic and macroeconomic risks as well as operating, legal and political risks. Furthermore, the group is faced with risks resulting from its project-business, risks related to key personnel as well as financial and tax risks. The group s technological expertise and market knowledge makes it possible to assess risk and apply appropriate measures to actively manage the risk exposure. To guarantee a responsible risk handling, CompuGroup works with standardized, group-wide integrated risk management system so that risks can be identified and analyzed at an early stage. A detailed description of the main risks and the specific structure of the risk management system can be found in the CompuGroup Medical AG annual report of 2014. It can be downloaded free of charge from the company s homepage at www.cgm.com. With the exception of the explanatory notes about CGM s current business activities under Financial and Operational Review, we see no changes compared to the risk and opportunities described in the group management report for the financial year 2014. Risks that may impact the company as a going concern were not evident during the first nine months of 2015, neither in form of individual risks nor from the total risk position for CompuGroup Medical as a whole. 6 CompuGroup Medical AG Financial Report for the period 1 January - 30 September 2015
Interim Statement of Financial Position as at 30 September 2015 ASSETS 30.09.2015 30.09.2014 31.12.2014 EUR '000 EUR '000 EUR '000 Non-current assets Intangible assets 543,938 519,215 517,541 Tangible assets 61,113 62,559 62,054 Financial assets Interests in affiliates (valued as equity) 3,493 696 854 Other Investments 29 161 140 Trade receivables 8,333 8,901 8,332 Other financial assets 2,982 4,141 2,789 Derivative financial instruments 0 6,056 0 Deferred taxes 2,597 1,962 2,442 622,484 603,691 594,152 Current assets Inventories 6,660 8,759 5,877 Trade receivables 97,391 92,446 96,760 Other financial assets 4,305 2,486 3,635 Other non-financial assets 13,824 11,176 9,496 Income tax claims 8,467 4,959 5,133 Securities (recognized as profit of loss as fair value) 168 100 95 Cash and cash equivalents 24,662 26,165 21,465 155,478 146,092 142,461 777,962 749,783 736,613 7
SHAREHOLDER EQUITY AND LIABILITIES 30.09.2015 30.09.2014 31.12.2014 EUR '000 EUR '000 EUR '000 Shareholder Equity Subscribed capital 53,219 53,219 53,219 Treasury shares -20,292-20,292-20,292 Reserves 155,279 164,999 144,922 Capital and reserves allocated 188,206 197,926 177,849 to the shareholder of the parent company Minority interests 507-4,475-41 188,713 193,451 177,808 Long-term liabilities Pension provision 16,050 13,128 17,428 Liabilities to banks 336,220 329,810 336,437 Purchase price liabilities 4,243 4,119 3,539 Other financial liabilities 7,020 9,818 7,600 Other non-financial liabilities 2,868 2,688 3,898 Derivative financial instruments 0 5,720 0 Deferred taxes 55,699 47,527 49,212 422,101 412,809 418,114 Current liabilities Liabilities to banks 30,395 24,942 19,943 Trade payables 22,522 21,661 25,439 Income tax liabilities 15,124 4,969 10,449 Provisions 34,935 27,527 30,834 Purchase price liabilities 8,732 8,163 8,987 Derivative financial instruments 1,246 0 4,763 Other financial liabilities 9,756 7,586 10,072 Other non-financial liabilities 44,438 48,674 30,204 167,148 143,522 140,691 777,962 749,783 736,613 8 CompuGroup Medical AG Financial Report for the period 1 January - 30 September 2015
Interim Income Statement for the reporting period of 1 January - 30 September 2015 01.07.-30.09. 01.07.-30.09. 01.01.-30.09. 01.01.-30.09. 01.01.-31.12. EUR '000 2015 2014 2015 2014 2014 Continuing operations Sales revenue 125,736 125,834 396,218 374,245 515,104 Capitalized in-house services 3,872 2,873 8,731 7,317 9,202 Other Income 478 1,390 1,930 2,507 12,721 Expenses for goods and services purchased -21,208-26,156-74,031-71,119-99,232 Personnel costs -62,390-58,802-188,208-182,209-247,811 Other expense -25,659-21,942-65,624-62,290-93,304 Earnings before interest, taxes depr, and amortization (EBITDA) 20,829 23,196 79,016 68,450 96,680 Depreciation of property, plants and tangible assets -1,951-1,868-5,698-5,820-7,809 Earnings before interest, taxes and amortization (EBITA) 18,878 21,328 73,318 62,630 88,871 Amortization of intangible assets -8,243-8,188-25,407-24,211-34,972 Earnings before interest and taxes (EBIT) 10,635 13,140 47,911 38,419 53,899 Results from associates recognised at equity 42 56 55 652 19 Financial income 1,980 10,383 12,925 10,572 12,981 Financial expense -6,651-9,037-14,619-18,643-22,444 Earnings before taxes (EBT) 6,006 14,541 46,271 30,999 44,455 Income taxes for the period -1,080-3,882-16,298-9,321-20,339 Consolidated net income for the period from continuing operations 4,926 10,660 29,973 21,538 24,116 Discontinued operations Profit for the period from discontinued operations 0 0 0-141 -20 Consolidated net income for the period 4,926 10,660 29,973 21,538 24,096 of which: allocated to parent company 4,988 10,853 29,955 22,196 26,337 of which: allocated to minority interests -62-192 18-658 -2,241 Earnings per share undiluted (EUR) 0.10 0.21 0.60 0.43 0.53 diluted (EUR) 0.10 0.21 0.60 0.43 0.53 Additional information: Cash net income (EUR) 12,991 17,966 53,712 43,513 55,795 Cash net income per share (EUR) 0.26 0.36 1.08 0.88 1.12 * Definition Cash Net Income: net income before minority interests plus amortization on intangible assets exept amortization on in-house capitalized software. 9
Interim Statement of Comprehensive Income for the reporting period of 1 January - 30 September 2015 01.07.-30.09. 01.07.-30.09. 01.01.-30.09. 01.01.-30.09. 01.01.-31.12. EUR '000 2015 2014 2015 2014 2014 Consolidated net income for the period 4,926 10,660 29,973 22,196 24,096 Other results Items that will not be reclassified to profit or loss at a future point in time Actuarial gains and losses on defined benefit plans 2,386-3 2,216 85-3,969 Deferred taxes on Actuarial gains and losses on defined benefit plans -594 1-549 -24 1,082 Items that will be reclassified to profit or loss at a future point in time when specific conditions are met Cash flow hedges of which: in equity 0-1,303 0 0-1,176 of which: income 0 4,108 0 4,108 9,028 Deferred taxes on cash flow hedges 0 1,740 0 1,349-2,356 Currency conversion differences -2,120-1,458-3,325-854 -11,447 Total comprehensive income for the period 4,599 13,745 28,315 26,861 15,258 of which: allocated to parent company 4,661 13,937 28,297 27,519 17,499 of which: allocated to minority interests -62-192 18-658 -2,241 10 CompuGroup Medical AG Financial Report for the period 1 January - 30 September 2015
Interim Cash Flow Statement as at 30 September 2015 01.07. - 30.09. 01.07. - 30.09. 01.01. - 30.09. 01.01. - 30.09. 01.01.-31.12. EUR 000 2015 2014 2015 2014 2014 Group net income 4,926 10,801 29,973 21,679 24,096 Amortization of intangible assets, plant and equipment 10,138 10,057 31,103 30,032 42,781 Earnings on sale of fixed assets -42-90 -120-96 -8,500 Change in provisions (inlcuding income tax liabilities) 435-4,992 2,943-5,436-1,661 Change in deferred taxes 5,071-2,042 6,496-923 -2,141 Other non-cash earnings/expenditure -2,174-3,086-13,079-1,717-6,765 18,354 10,648 57,316 43,539 47,810 Change in inventories -535-817 -723-3,005-685 Change in trade receivables 18,398 1,197 999-7,757-7,054 Change in income tax receivables -3,288-511 -2,855 3,955 2,121 Change in other receivables 31-1,184-4,924-3,643-2,379 Change in trade accounts payable 2,263 480-3,404-4,438-3,070 Change in other liabilities -20,629-3,761 10,769 19,496-4,803 Cash flow from operating activities 14,594 6,051 57,177 48,147 31,940 Cash flow on disposals of intangible assets 1 11 14 41 132 Cash outflow for capital expenditure in intangible assets -2,908-6,051-11,431-15,341-16,844 Cash inflow on disposals of sales of property, plant and equipment 264 39 568 215 523 Cash outflow for capital expenditure in property, plant and equipment -2,177-1,582-4,351-6,517-8,081 Cash flow for the aquisition of subsidiaries -3,558-7,450-26,947-34,024-40,649 Cash outflow for the aquisition of subsidiaries from prior periods -1,088 0-1,088-673 -1,352 Cash inflow from disposal of subsidiaries 0-1,100 0-704 9,000 Cash outflow for capital expenditure in joint ventures -2,508 0-2,508 0 0 Cash flow from investing activities -11,973-16,133-45,742-57,003-57,271 Purchase of own shares 0 0 0 0 0 Dividends paid 0 0-17,403-17,418-17,403 Capital contributions from non-controlling interests 0 0 0 0 0 Purchase of minority interests 0-237 -36-237 -280 Cash inflow from assumption of loans 18,273 327,357 58,869 392,497 343,249 Cash outflow from the repayment of loans -15,620-302,294-49,717-363,144-302,447 Cash flow from financing activities 2,653 24,825-8,287 11,697 23,119 Cash and cash equivalents at the beginning of the period 0 0 21,465 23,453 23,453 Change in cash an dcash equivalents 5,273 14,743 3,149 2,841-2,212 Changes in cash due to exchange rates -163-139 48-128 224 Cash and cash equivalents at the end of the period 5,110 14,603 24,662 26,165 21,465 Interest paid 3,390 7,333 10,698 14,571 19,070 Interest received 142 118 357 422 732 Income tax paid 3,234 10,704 12,047 18,760 23,463 Income tax received 120-313 357 4,140 0 11
Interim Changes in Consolidated Equity as at 30 September 2015 Accumulated other comprehensive income Attributable to owners of Share Treasury Other Other Cashflow CompuGroup Non-controlling Total EUR 000 capital shares reserves Hedges conversion Medical AG interest equity Balance as at 01.01.2014 53,219-20,292 168,792-5,457-7,493 188,769-4,102 184,667 Group net income 0 0 26,337 0 0 26,337-2,241 24,096 Other results Cashflow Hedges 0 0 0 1,335 0 1,335 0 1,335 Cashflow Hedges (closing) 0 0 0 4,161 0 4,161 0 4,161 Actuarial gains and losses 0 0-2,877 0 0-2,877 0-2,877 Currency conversion differences 0 0 0 0-11,447-11,447 0-11,447 Total result of period 0 0 23,450 5,496-11,447 17,499-2,241 15,258 Transactions with shareholders Capital contributiion 0 0 0 0 0 0 0 0 Dividend distribution 0 0-17,403 0 0-17,403 0-17,403 Stock options programm 0 0 0 0 0 0 0 0 Repurchase of treasury shares 0 0 0 0 0 0 0 0 Non-controlling interests from acquisitions 0 0 0 0 0 0 0 0 Additional purchase of shares from 0 0-11,127 0 0-11,127 6,430-4,697 non-controlling interests after control 0 0-28,530 0 0-28,530 6,430-22,100 Changes in the scope of consolidation 0 0 190-39 -40 111-128 -17 Balance as at 01.01.2015 53,219-20,292 163,902 0-18,980 177,848-41 177,808 Group net income 0 0 29,955 0 0 29,955 18 29,973 Other results 0 Cashflow Hedges 0 0 0 0 0 0 0 0 Actuarial gains and losses 0 0 1,667 0 0 1,667 0 1,667 Currency conversion differences 0 0 0 0-3,325-3,325-6 -3,331 Total result of the period 0 0 31,622 0-3,325 28,297 11 28,308 Transactions with shareholders Capital contributiion 0 0 0 0 0 0 0 0 Dividend distribution 0 0-17,403 0 0-17,403 0-17,403 Stock options programm 0 0 0 0 0 0 0 0 Non-controlling interrests from acquisitions 0 0 0 0 0 0 0 0 Additional purchase of shares from 0 0-229 0 0-229 229 0 non-controlling interests after control Repurchase of treasury shares 0 0 0 0 0 0 0 0 Issue of treasury shares 0 0 0 0 0 0 0 0 0 0-17,632 0 0-17,632 229-17,403 Changes in the scope of consolidation 0 0 0 0 0 0 0 0 Balance as at 30.09.2015 53,219-20,292 177,892 0-22,305 188,513 507 189,021 12 CompuGroup Medical AG Financial Report for the period 1 January - 30 September 2015
Explanatory Notes as at 30 September 2015 GENERAL ACCOUNTING PRINCIPLES FOR THE INTERIM FINANCIAL REPORT General Accounting Principles The accompanying condensed IFRS-Interim Financial Statements for the period ended 30 September 2015 is a Consolidated Financial Statement. Unless otherwise specified, all amounts are provided in thousands of euros (EUR thousands) or millions of euros (EUR millions). Rounding differences of +/- one unit (EUR thousands, percent, etc.) may arise as a result of calculations. The first quarter consolidated financial statements as of 30 September 2015 have been prepared, like the Consolidated Annual Financial Statements for the year 2014, in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU. This Consolidated Interim Financial Statements prepared in accordance with IAS 34 is condensed compared with the scope applied of the Consolidated Financial Statements for the full year. Apart from the exceptions detailed hereinafter for new or revised standards, the accounting policies in the interim Financial Statements are consistent with those used in the Consolidated Financial Statements for the year ended 31 December 2014. Relevant information can be found in the Consolidated Financial Statements as of 31 December 2014. This Consolidated Interim Financial Statements and the Interim Management Report were not reviewed by any auditor. The overview below gives information about the relevant foreign exchange rates for the condensed consolidated interim IFRSfinancial statements: Average rates Fixed rates January - September 1 corresponds to 30.09.2015 31.12.2014 2015 2014 Denmark (DKK) 7.46 7.45 7.46 7.45 Canada (CAD) 1.50 1.41 1.40 1.47 Malaysia (MYR) 4.92 4.25 4.22 4.34 Norway (NOK) 9.52 9.04 8.82 8.35 Poland (PLN) 4.24 4.27 4.16 4.18 Sweden (SEK) 9.41 9.39 9.37 9.10 Switzerland (CHF) 1.09 1.20 1.06 1.21 South Africa (ZAR) 15.50 14.04 13.70 14.40 Czech Republic (CZK) 27.19 27.74 27.36 27.54 Turkey (TRY) 3.39 2.83 2.97 2.91 USA (USD) 1.12 1.21 1.11 1.33 Unless otherwise stated, all figures refer to the first nine months of 2015 and 2014 respectively. The business development showed no signs of significant cyclical fluctuations. The business volume normally tends to be higher in the second half of the year and in particular in the fourth quarter of the financial year (1 October 31 December). When preparing the Consolidated Interim Financial Statements management makes estimates and assumptions in the process of applying the accounting policies that may influence the amounts of assets, liabilities and contingent liabilities as well as expense and income. Although these assumptions and estimates were made to the best knowledge of the Management Board, actual results may differ from these estimates. The main assumptions being used for preparing the Consolidated Interim Financial Statements are identical to those used for the preparation of the Consolidated Financial Statements as at year end 31 December 2014. In addition, assumptions have been made in the determination of the personnel expenses and provisions for post-employment benefits. 13
Standards, interpretations and changes to published standards to be applied in 2014 CompuGroup Medical has applied all accounting pronouncements adopted by the EU and required to be applied as from 1 January 2015. Various requirements have entered into force since 1 January 2015, as part of the annual improvements to IFRS 2013. These included amendments to IFRS 1, IFRS 3, IFRS 13, and IAS 40 and did not materially affect the net assets, financial position, and results of operations of the CompuGroup Medical. IFRIC 21 has also been applicable since 1 January 2015. IFRIC 21 governs the accounting for levies imposed by governments that are not covered by IAS 12 Income Taxes. In particular, the interpretation clarifies the circumstances in which a liability for a levy is to be recognized in the financial statements. This interpretation did not have any material effects on the net assets, financial position, and results of operations of the CompuGroup Medical. In all other respects, the same accounting policies and consolidation principles were generally applied to the preparation of consolidated interim financial statements and the presentation of the prior-year comparative figures as to the consolidated financial statements for 2014. A detailed description of these accounting policies is given in the notes to the 2014 consolidated financial statements. Amendments, standards and interpretation published by the IASB but not yet adopted into European legislation The IASB and the IFRIC have adopted several additional standards and interpretations in 2015 and the previous years which were not yet compulsorily applicable in the financial year 2015 beginning on the 1 January. The application of these IFRS and IFRIC is depended on the adoption by the EU ( endorsement ). Standard Content Applicable from IFRS 9 Financial Instruments 1 January 2014 IFRS 14 Regulatory Deferral Accounts 1 January 2014 IFRS 15 Revenue from Contracts with Customers 1 January 2014 Amendments to IFRS 10, IFRS 12 and IAS 28, Investment Entities Applying the Consolidation Exception 1 January 2014 Amendments to IAS 1 (Presentation of Financial Statements) The changes comprise clarifications relating to the materiality of the items presented in the balance sheet, the statement of comprehensive income, the cash flow statement, the statement of changes in equity and the disclosures in the notes. 1 January 2014 Annual Improvements to IFRS (2012-2014 Cycle) The annual improvement process refers to the following standards: 1 January 2014 IFRS 5, IFRS 7, IAS 19, IAS 34 IFRS 10 and IAS 28, amendment Sale or Contribution of Assets between an Investor and its 1 January 2014 Associate or Joint Venture IAS 27, amendment Equity method in Separate Financial Statements 1 January 2014 IAS 16 and IAS 41, amendment Agriculture: Bearer Plants 1 January 2014 IAS 16 and IAS 38, amendment Clarification of Acceptable Methods of Depreciation and 1 January 2014 Amortization IFRS 11, amendment Accounting for Acquisitions of Interests in Joint Operations 1 January 2014 The possibility of an early application for particular standards is given. CompuGroup Medical does not make use of the possibility of an early application of these standards. Currently CompuGroup Medical evaluates the consequences which will arise from the first time adoption of these standards. However it is expected that IFRS 15 will have significant changes to the (interim-) consolidated financial statements due to the first time application. From the first time application of the other standards it is expected that there will be no significant changes to the (interim-) consolidated financial statements of CompuGroup Medical. Selected explanatory notes Consolidation group The Consolidated Interim Financial Statements as of 30 September 2015 include the Financial Statements of CompuGroup Medical AG and all companies controlled by CompuGroup Medical AG (subsidiaries) as of 30 September 2015. Consolidation begins from the date control is obtained and ends when control ceases to exist. Consolidated companies include those companies included in Financial Statements as of year-end 2014 and the newly acquired, disposed or founded subsidiaries as described in section Company acquisitions, disposals and foundations in the selected explanatory notes below. Changes in the business and the economic circumstances In comparison to financial year 2014 there have been no significant changes to the business and the economic circumstances CompuGroup Medical AG is exposed to with the exception of the factors described in the Interim Management Report. 14 CompuGroup Medical AG Financial Report for the period 1 January - 30 September 2015
Explanatory Notes Continued Company acquisitions, disposals and foundations EUR 000 Total Medical EDI 2015 Services (PTY) LTD Medicitalia Compufit BVBA Stock Gruppe Other acquisitions Purchase date 07.01.2015 05.08.2015 23.03.2015 01.05.2015 - Voting rights acquired in % 100% 100% 100% 100% - Acquired assets and liabilities assumed recognized at acquisition date Non-current assets 24,454 11,331 2,183 4,449 4,493 1,998 Software 4,764 2,624 222 729 882 307 Customer relationships 17,306 8,328 1,832 3,084 2,549 1,513 Brands 684 156 92 98 188 150 Order backlog 814 0 0 0 814 0 Property and buildings 242 0 0 242 0 0 Other fixed assets and office equipment 570 182 9 291 60 28 Other non-current financial assets 74 41 28 5 0 0 Other non-current non-financial assets 0 0 0 0 0 0 Deferred tax assets 0 0 0 0 0 0 Current assets 3,370 610 273 1,144 847 496 Inventories 51 0 0 1 50 Trade receivables 1,445 453 148 591 87 166 Other current financial assets 39 10 0 0 2 27 Other current non-financial assets 113 28 2 50 14 19 Other assets 122 0 104 0 0 18 Cash and cash equivalents 1,600 119 19 502 744 216 Non-current liabilities 6,936 3,147 674 1,354 1,331 430 Pensions 77 0 0 0 0 77 Liabilities to banks 25 0 0 25 0 0 Other provisions 2 0 0 0 0 2 Other financial liabilities 38 38 0 0 0 0 Other non-financial liabilities 0 0 0 0 0 0 Other liabilities 0 0 0 0 0 0 Deferred tax 6,794 3,109 674 1,329 1,331 351 Current liabilities 3,072 321 103 1,508 760 380 Trade payables 346 76 4 44 94 128 Contingent liabilities 0 0 0 0 0 0 Liabilities to banks 76 0 0 16 60 0 Other provisions 299 0 0 132 86 81 Other liabilities 195 0 87 30 41 37 Other financial liabilities 123 40 2 45 20 16 Other non-financial liabilities 2,033 205 10 1,241 459 118 Net assets acquired 17,816 8,473 1,679 2,731 3,249 1,684 Purchase price paid in cash 27,511 12,031 2,205 5,000 4,950 3,325 Liabilities assumed 2,686 0 1,390 0 683 613 of which contingent consideration 969 0 445 0 0 524 Issued equity instruments 0 0 0 0 0 0 Total consideration transferred 30,197 12,031 3,595 5,000 5,633 3,938 Non-controlling interests 0 0 0 0 0 0 Goodwill 12,380 3,558 1,916 2,269 2,384 2,253 Acquired cash and cash equivalents 1,600 119 19 502 744 216 Purchase price paid in cash 27,511 12,031 2,205 5,000 4,950 3,325 Prepayments on acquisitions 0 0 0 0 0 0 Fair value of equity interest in the acquiree held by 29 0 0 0 0 29 acquirer immediately before the acquisition date Payments for acquisitions after date of acquisition 2,124 0 0 0 483 1,641 Cash outflow for acquisitions (net) -28,064-11,912-2,186-4,498-4,689-4,779 Effects of the acquisition on Group result Sales revenue following date of acquisition 7,450 4,867 73 1,208 1,161 141 Result following date of acquisition 1,114 1,559-643 121 73 4 Sales revenue in 2014 (hypothetical date of 6,319 1,708 450 569 2,780 812 acquisition 1 January 2014) Result 2014 (hypothetical date of acquisition 1 1,253 431 279 38 531-26 January 2014) Costs attributable to the acquisition 263 82 51 40 52 38 15
Acquisition of Medical EDI Services (PTY) LTD, South Africa In January 2015 CompuGroup Medical South Africa (PTY) LTD, a 100% subsidiary of CompuGroup Medical AG (CGM), acquired 100 % of the shares Medical EDI Services (PTY) LTD based in Margate, South Africa. MedEDI develops software which aids general practitioners in administration and invoicing as well as the operation of online services for insurance billing. MedEDI employs about 70 employees at its locations in Johannesburg, Margate and Cape Town. The company has approximately 2,700 practices as customers and is a leading provider in the area of billing services. The solutions support all administrative processes in a practice s daily routine and sends patient invoices to the relevant insurances in real-time. The total sales revenue of the Medical EDI Services was in 2014 approximately EUR 5.4 million with an EBITDA of approximately EUR 1.9 million. The consolidation of Medical EDI Services began 7 January 2015. From this acquisition, CGM expects to be able to significantly expand its ambulatory information business and the billing services with insurances in South Africa by offering innovative software products as well as services. Synergies are expected through the gaining of know-how and through cost efficiency opportunities. The preliminary goodwill of EUR 3,558 thousand results from the synergies within the Group as a result of the inclusion of Medical EDI Services into CGM. It is expected that the recognized goodwill will not be deductible for tax purposes. The preliminary fair value of the acquired intangible assets excluding goodwill amounts to EUR 11,108 thousand. The initial consolidation of the acquisition of Medical EDI Services as at 1 January 2015 is carried out in preliminary form. The analysis of the acquired order backlog as well as the valuation of the acquired customer relationships, software and brands is not yet completed due to some not yet fully received or evaluated information. Acquisition of BS Concept Realization B.V., Netherlands In March 2015 CompuGroup Medical Holding Cooperatief, a 100% subsidiary of CompuGroup Medical AG (CGM), acquired 100 % of the shares of BS Concept Realization B.V. based in Hilversum, Netherlands. With this acquisition, CompuGroup Medical enters the new upcoming market of software services for homecare. BS Concept Realization, with its software product Zorgverband, is the Dutch market leader in communication products between healthcare professionals and patients in homecare together with their family members. Recent legislation in The Netherlands confirms the tendency towards patients staying at home for a longer period while increasing the participation of patients/clients and their families in the care at home. The Zorgverband system supports both professional and non-professional caregivers, thus providing for more efficiencies in health care. The total sales revenue of BS Concept Realization was in 2014 approximately EUR 2.0 million with an EBITDA of approximately EUR -0.1 million. The consolidation of BS Concept Realization began 26 March 2015. Besides entering the new upcoming market of software services for homecare, CGM expects from this acquisition, to be able to significantly expand its reach through the existing and upcoming customer base in the Dutch Zorgverband in the Netherlands. The preliminary goodwill of EUR 148 thousand results from the synergies within the Group as a result of the inclusion of BS Concept Realitation into CGM. It is expected that the recognized goodwill will not be deductible for tax purposes. The preliminary fair value of the acquired intangible assets excluding goodwill amounts to EUR 932 thousand. The initial consolidation of the acquisition of BS Concept Realization B.V. as at 26 March 2015 is carried out in preliminary form. The analysis of the acquired order backlog as well as the valuation of the acquired customer relationships, software and brands is not yet completed due to some not yet fully received or evaluated information. 16 CompuGroup Medical AG Financial Report for the period 1 January - 30 September 2015
Explanatory Notes Continued Acquisition of Compufit BVBA, Belgium In March 2015 CompuGroup Belgium BVBA, a 100% subsidiary of CompuGroup Medical AG (CGM), acquired 100 % of the shares of Compufit BVBA, based in Oostende, Belgium. The newly acquired company is a market leader in software for physiotherapists as well as rehabilitation clinics. With this acquisition, CGM will now serve 50% of the physiotherapists as well as 30% of the rehabilitation clinics in Belgium. Compufit BVBA develops software solutions for physiotherapists and rehabilitation clinics in Belgium and is, with its 6,000 customers, number one in these markets in Belgium. Out of 141 Belgians hospitals, which offer rehabilitation, 44 use Compufit s software product. Additionally, it sells hardware and other products. The consolidation of Compufit BVBA began 23 March 2015. The total sales revenue of Compufit BVBA was in 2014 approximately EUR 2.0 million with an EBITDA of approximately EUR 0.2 million. CGM expects by combining the strength of CGM Belgium and Compufit BVBA to raise synergies and enable a better service environment for the combined customer base. The preliminary goodwill of EUR 2,269 thousand results from the synergies within the Group as a result of the inclusion of Compufit BVBA into CGM. It is expected that the recognized goodwill will not be deductible for tax purposes. The preliminary fair value of the acquired intangible assets excluding goodwill amounts to EUR 3,911 thousand. The initial consolidation of the acquisition of BS Compufit BVBA as at 23 March 2015 is carried out in preliminary form. The analysis of the acquired order backlog as well as the valuation of the acquired customer relationships, software and brands is not yet completed due to some not yet fully received or evaluated information. Acquisition of the Stock Group, Germany End of April 2015 CompuGroup Medical Deutschland AG, a 100% subsidiary of CompuGroup Medical AG (CGM), acquired the Stock Informatik GmbH & Co. KG and the Stock Informatik Verwaltungs GmbH, both located at Fröndenberg/ Ruhr. With this acquisition Compugroup Medical enters the market for software services in the segment occupational healthcare, preventive healthcare and occupational safety. Stock Informatik is the market leader in software services in the segment occupational healthcare, preventive healthcare and occupational safety. The Software Suite supports companies at prevention and active precaution of the health of their employees and is in use at numerous hospitals, companies up to many big corporations. As European specialist the software solutions are also offered in Switzerland and Austria. The consolidation of the Stock Group began at the 1 May 2015. The total sales revenue of the Stock Group was in 2014 approximately EUR 3.0 million with an EBITDA of approximately EUR 0.9 million. With the integration of the Stock Group into the CGM family, CGM expects to cross over from occupational healthcare, preventive healthcare and occupational safety to physicians in private practices and clinics. Together with the leading software solutions for physicians in private practices and clinics the software suites of Stock Informatik are seen as a perfect addition to CGMs extensive ehealth offers. The preliminary goodwill of EUR 2,384 thousand results from the synergies within the Group as a result of the inclusion of the Stock Group into CGM. The recognized goodwill will not be deductible for tax purposes. The preliminary fair value of the acquired intangible assets excluding goodwill amounts to EUR 4,433 thousand. The initial consolidation of the acquisition of the Stock Group as at 1 May 2015 is carried out in preliminary form. The analysis of the acquired order backlog as well as the valuation of the acquired customer relationships, software and brands is not yet completed due to some not yet fully received or evaluated information. 17
Acquisition of Medicitalia S.r.l. In August 2015 CompuGroup Medical Italia SpA, a 100% subsidiary of CompuGroup Medical AG (CGM), acquired Medicitalia S.r.l. based in Savona, Italy. Medicitalia.it is the leading online portal for ehealth in Italy. The consolidation of Medicitalia S.r.l. began 5 August 2015. The total sales revenue of the Medicitalia S.r.l. was in 2014 approximately EUR 400 thousand with an EBITDA of approximately EUR 261 thousand. CGM Group expects to provide the large community of Medicitalia with services and connect them to the provider base of 50 % of the public doctors and 60 % of the pharmacies in Italy. Additionally CGM Group expects to benefit from the online portal experience for the online strategy in other countries. The preliminary goodwill of EUR 1,916 thousand results from the synergies within the Group as a result of the inclusion of Medicitalia S.r.l. into CGM. It is expected that the recognized goodwill will not be deductible for tax purposes. The preliminary fair value of the acquired intangible assets excluding goodwill amounts to EUR 2,146 thousand. The initial consolidation of the acquisition of Medicitali S.r.l. as at 5 August 2015 is carried out in preliminary form. The analysis of the acquired order backlog as well as the valuation of the acquired customer relationships, software and brands is not yet completed due to some not yet fully received or evaluated information. Farma3tec S.r.l., Mondofarma S.r.l., Italy, Labelsoft B.V., Netherlands For the group of companies farma3tec S.r.l., Mondofarma S.r.l., Italy, acquired in 2014 and for Labelsoft B.V., Netherlands acquired in 2014 in the reporting period no adjustments arose on the preliminary fair value of the acquired intangible assets. Acquisitions and disposals of items of Tangible assets In the first nine months of the financial year 2015, CompuGroup Medical AG acquired tangible assets such as office buildings and office equipment for a total amount of EUR 4.3 million. Related-party transactions The related-party transactions are as follows: Sale of goods Purchase of goods Receivables Liabilities EUR 000 30.09.2015 30.09.2014 30.09.2015 30.09.2014 30.09.2015 30.09.2014 30.09.2015 30.09.2014 Related Persons 71 21 22 408 5 27 0 0 Related companies 2,093 1,777 6,628 2,907 528 1,216 189 203 Associated companies 19 35 15 16 31 28 0 3 SUM 2,183 1,833 6,666 3,330 563 1,270 189 207 Compliance with payment obligations and financial covenants On the 23 September 2014 CGM entered into a new syndicated loan facility for a total sum of EUR 400 million. The syndicated loan facility consists of a term loan facility (also referred to in the following as TLF ) for EUR 225 million and a multi currency revolving loan facility (also referred to in the following as RLF ) for EUR 175 million. The syndicated loan facility has a duration of five years. The TLF must be repaid pro rata in equal instalments of EUR 15.0 million on 31 January and 31 July in each year, commencing on 31 July 2015, with a final payment of the balance of any outstanding term facility loans to be repaid on the termination date. The RLF must be repaid at the end of each interest period and can be taken out again immediately thereafter. The interest period can be chosen by CGM AG at its discretion. The interest rate is based upon the 3 month-euribor rate for the interest period chosen plus a margin derived from the relationship between the consolidated net borrowings and the adjusted consolidated EBITDA (Leverage). The margin is 2.0 percent for the first nine months. 18 CompuGroup Medical AG Financial Report for the period 1 January - 30 September 2015
Explanatory Notes Continued As of 30 September 2015 EUR 210 million of the TLF and EUR 115 million of the RLF were utilized. Loan origination fees totaling EUR 3.5 million were incurred related to these facilities. These fees will be charged as a financial expense over the term of the loan agreement. For this syndicated loan facility no hedge has been concluded. The grant of the loan is linked to the compliance of certain financial covenants. The loan agreement includes joint and several guarantees for payment by a number of CGM s subsidiaries (contingent liability in case of non-payment of CompuGroup Medical AG). In the first nine months of the financial year 2015 CompuGroup Medical is compliant with all financial covenants entered in all of its loan agreements. Other financial obligations and finance commitments As at the 30 September 2015 the Group had open obligations from non-cancelable operating leases, maturing as follows: EUR 000 30.09.2015 30.09.2014 Within 1 year 12,672 11,299 Between 2 and 5 years 24,491 22,360 Longer than 5 years 4,034 6,011 SUM 41,197 39,671 Payments from operating lease agreements include rent for the Group s office equipment and particularly for office buildings (without purchase option). Lease agreements are concluded for an average term of three years. The rents are fixed for three to seven years. Operating leasing relationships are recognized pro rata in the income statement. Other financial commitments did not change significantly during the first nine months of the financial year 2015 compared to 31 December 2014. Financial instruments The Group has various financial assets such as trade receivables and cash and cash equivalents, which result directly from operations. In the first nine months of the financial year 2015 the same accounting policies and valuation methods that were applied in the Financial Statements as of year-end 2014 have been applied to the company s financial instruments. 19
The following table presents carrying amounts and valuation of the Group s financial instruments grouped by categories according to IAS 39: IAS 17 IAS 39 valuation valuation Categories of financial instruments in accordance with IAS 39 Category according to IAS 39 Book value as at 30.09.2015 Acquisiton costs (continued) Fair Value through profit and loss Fair value regonized in equity Acquisiton costs continued Fair Value as at 30.09.2015 Financial assets Cash and cash equivalents LaR 24,662 24,662 0 0 0 24,662 Trade receivables LaR 53,009 53,009 0 0 0 53,009 Receivanles from construction contracts (PoC) LaR 31,465 31,465 0 0 0 29,373 Other receivables LaR 5,741 5,741 0 0 0 5,741 Finance lease receivables - 22,795 0 0 0 22,795 24,599 Other financial assets AfS 29 29 0 0 0 29 Securities FVtPL 168 0 168 0 0 168 Stock Options - held for trading FVtPL 0 0 0 0 0 0 Total financial assets 137,870 114,907 168 0 22,795 137,582 Financial liabilities Liabilities to banks ol 366,615 366,615 0 0 0 364,149 Purchase price liabiliites ol 12,976 12,976 0 0 0 12,976 Purchase price liabilities ol 22,522 22,522 0 0 0 22,522 Trade payables ol 15,670 15,670 0 0 0 15,670 Other financial liabilities - 1,106 0 0 0 1,106 1,175 Financial lease obligations FVtPL 1,246 0 1,246 0 0 1,246 Interest rate swaps Cash flow hedge Total financial liabilities 420,135 417,783 1,246 0 1,106 417,737 Total per category Assets available for sale AfS 29 29 0 0 0 29 Loans and receivables LaR 114,878 114,878 0 0 0 112,786 Assets at fair value through profit and loss FVtPL 168 0 168 0 0 168 Other financial liabilities ol 417,783 417,783 0 0 0 415,316 Liabilities at fair value through profit and loss FVtPL 1,246 0 1,246 0 0 1,246 The fair value is not always available as a market value, which often necessitates a determination based on various measurement parameters. Depending on the availability of observable parameters and the relevance of these parameters for determining the fair value as a whole, the fair value is assigned to Level 1, 2 or 3. Assignment to these levels is effected under consideration of the following factors: + Level 1 parameters: Here, the market value of assets and liabilities is calculated based on quoted, unadjusted prices like those that arise for similar or identical assets and liabilities in active markets + Level 2 parameters: Here, the market value of assets and liabilities is calculated on the basis of parameters for which either directly or indirectly quoted prices are also available to an active market. + Level 3 parameters: Here, the market value of assets and liabilities is calculated on the basis of parameters for which there are no observable market data. 20 CompuGroup Medical AG Financial Report for the period 1 January - 30 September 2015
Explanatory Notes Continued Fair value of financial assets and liabilities that are regularly measured at fair value according to the valuation hierarchies: Assessed valuation hierarchies at fair value - financial instruments EUR 000 30.09.2015 Level 1 Level 2 Level 3 Financial assets at fair value through profit and loss 168 168 0 0 thereof securities 168 168 0 0 thereof stock options held for trading 0 0 0 0 Financial assets at fair value wihtout through equity 0 0 0 0 Total 168 168 0 0 Liabilities at fair value through profit and loss 1,246 0 1,246 0 thereof interest rate swaps 1,246 0 1,246 0 Liabilities at fair value through equity 0 0 0 0 Total 1,246 0 1,246 0 1) Securities (Level 1): The fair value of securities in the amount of EUR 168 thousand (31. December 2014: EUR 95 thousand) is based on quoted market prices in an active market at the balance sheet date. Significant unobservable input parameters are not available which is why there is no ratio of unobservable input parameters to the fair value of the securities. 2) Interest rate swaps (Level 2): Cash flow hedges (2015: EUR 1,246 thousand; 31. December 2014: EUR 4,762 thousand) represent the negative market values of interest rate hedges (interest rate swaps), measured at fair value based on the markto-market method. The fair value is the present value of future cash flows based on observable yield curves. Derivative financial instruments are used to hedge against the effect of interest rate fluctuations. The nominal value of the interest rate swaps amounts to EUR 250 million on the 30 June 2014 and thus remained unchanged from last year. On the 30 September 2015, the fixed interest rates ranged from 1.83 percent to 2.07 percent (unchanged from previous year), the variable interest rate is the 3-month EURIBOR: Fair Value of financial assets and liabilities that are not regularly measured at fair value according to the valuation hierarchies: EUR 000 30.09.2015 Level 1 Level 2 Level 3 Fair value of financial assets valuated at (continued) acquisition costs Trade receivables 53,009 0 53,009 0 Receivables from construction contracts (PoC) 29,373 0 29,373 0 Other receivables 5,741 0 2,276 3,465 Finance lease receivables 24,599 0 24,599 0 Other financial assets 29 0 0 29 Total 112,751 0 109,257 3,494 Fair value of financial liabilities valuated at (continued) acquisiton costs Liabilities to banks 364,149 0 0 364,149 Purchase price liabilities 12,976 0 0 12,976 Trade payables 22,522 0 22,522 0 Other financial liabilities 15,670 0 9,886 5,784 Finance lease obligations 1,175 0 1,175 0 Total 416,492 0 33,583 382,909 Post balance sheet events There have been no post balance sheet events. 21
Explanatory Notes Continued Segment reporting In accordance with IFRS 8 Operating Segments the activities of CompuGroup Medical AG are divided into operating segments for segment reporting purposes. A classification based on the individual products or services is applied for controlling purposes and for the allocation of resources. Six operating segments result from this classification. These six operating segments are aggregated into the three reportable segments HPS I (Health Provider Services I), HPS II (Health Provider Services II) and HCS (Health Connectivity Services). The board of directors as Chief Operating Decision Maker evaluates the performance of the three reportable segments based on the reporting system and takes decisions on the allocation of resources. For the evaluation of the performance of the operating segments the board of directors uses Earnings before interest, tax, depreciation and amortization (EBITDA) as a key performance indicator, which represents the result of the individual segment. Segment I: Segment II: Segment III: Health Provider Services I Health Provider Services II Health Connectivity Services (HPS I) (HPS II) (HCS) 2015 2014 2014 2015 2014 2014 2015 2014 2014 EUR 000 Jan - Sep Jan - Sep Jan-Dec Jan - Sep Jan - Sep Jan-Dec Jan - Sep Jan - Sep Jan-Dec Sales to third parties 300,511 275,208 375,335 51,300 56,090 79,784 44,354 42,827 60,069 Sales between segments 5,018 5,306 6,459 7,050 8,993 10,843 4,359 4,211 5,885 Segment Sales 305,529 280,514 381,794 58,350 65,083 90,627 48,712 47,038 65,954 thereof recurring sales 226,455 204,014 273,938 27,161 27,189 40,243 14,290 13,300 17,891 Capitalized in-house services 1,617 656 1,728 2,033 0 1,903 1,090 2,080 735 Other income 1,318 952 4,459 1,204 277 7,322 601 31 1,049 Expenses for goods and services purchased -60,308-57,485-81,192-11,832-13,353-17,390-14,816-10,717-16,597 Personnel costs -114,072-105,859-145,442-35,150-38,671-52,676-18,490-21,879-25,689 Other expense -49,295-36,963-64,969-8,267-5,374-12,915-8,953-8,087-14,479 EBITDA 84,789 81,816 96,378 6,339 7,963 16,871 8,145 8,466 10,973 in % of sales 27.8% 29.7% 25.7% 10.9% 14.2% 21.1% 16.7% 19.8% 18.3% Depreciation of property, plants and tangible assets Amortization of intangible assets Impairment for financial assets EBIT Results from associates recognised at equity Financial income Financial expense EBT Taxes on income for the period Profit for the period from discontinued operations Consolidated net income for the period in % of sales CASH NET INCOME* * Cash net income: Cash net income before minority interests plus amortization on intangible assets except amortization on in-house capitalized software. 22 CompuGroup Medical AG Financial Report for the period 1 January - 30 September 2015
All other Total Consolidation CompuGroup Medical Segments Segments adjustments Group 2015 2014 2014 2015 2014 2014 2015 2014 2014 2015 2014 2014 Jan - Sep Jan - Sep Jan-Dec Jan - Sep Jan - Sep Jan-Dec Jan - Sep Jan - Sep Jan-Dec Jan - Sep Jan - Sep Jan-Dec 54 120-83 396,218 374,245 515,104 0 0 0 396,218 374,245 515,104 2,098 345 3,022 18,525 18,855 26,209-18,525-18,855-26,209 0 0 0 2,152 465 2,939 414,743 393,100 541,313-18,525-18,855-26,209 396,218 374,245 515,104 9 9 12 267,916 244,512 332,083 0 0 0 267,916 244,512 332,083 3,991 4,581 4,836 8,731 7,317 9,202 0 0 0 8,731 7,317 9,202 3,447 89 5,500 6,571 1,350 18,330-4,642 1,157-5,609 1,930 2,507 12,721-30 -2-110 -86,985-81,557-115,290 12,954 10,437 16,058-74,031-71,119-99,232-7,244-4,322-9,221-174,956-170,730-233,028-13,252-11,479-14,784-188,208-182,209-247,811-9,029-1,093-14,604-75,543-51,517-106,967 9,919-10,773 13,663-65,624-62,290-93,304-6,712-282 -10,661 92,560 97,963 113,561-13,545-29,512-16,881 79,016 68,450 96,680 22.3% 26.2% 22.0% 19.9% 18.3% 18.8% -5,698-5,820-7,809-25,407-24,211-34,972 0 0 0 47,911 38,419 53,899 55 652 19 12,925 10,572 12,981-14,619-18,643-22,444 46,271 30,999 44,455-16,298-9,321-20,339 0-141 -20 29,973 21,538 24,096 7.6% 5.8% 4.7% 53,712 43,513 55,795 23
Additional Information FINANCIAL CALENDAR 2015/2016 Date Event 05 November 2015 Interim Report Q3 2015 04 February 2016 Preliminary Q4/Full Year Repot 2015 31 March 2016 Annual Report 2015 04 May 2016 Interim Report Q1 2016 18 May 2016 Annual General Shareholder Meeting 04 August 2016 Interim Report Q2 2016 12 October 2016 Investor- and Analyst Conference 09 November 2016 Interim Report Q3 2016 SHARE INFORMATION The CompuGroup share finished the third quarter with a closing price of EUR 29.54. The average closing share price in the third quarter was EUR 29.98, compared to EUR 28.38 in Q2 2015. The highest quoted price during the quarter was EUR 36.36 on 21 July 2015 and the lowest price EUR 24.49 on 24 August 2015. The trading volume of CompuGroup shares was 3.4 million shares during the third quarter, up 36 percent compared to the previous quarter. On average, the daily trading volume was approximately 52,000 shares (daily average in 2014: approximately 12,000). By the end of September 2015, a total of eight analyst companies were covering the CompuGroup Medical share on a regular basis. The forecast price targets ranged from EUR 21.50 to EUR 40.00. Three analysts rated the shares a buy and five analysts as hold or neutral. CONTACT CompuGroup Medical AG Investor Relations Maria Trost 21 56070 Koblenz Telephone: +49 (0) 261 8000-6200 Fax: +49 (0) 261 8000-3200 investor@cgm.com www.cgm.com 24 CompuGroup Medical AG Financial Report for the period 1 January - 30 September 2015
Management Responsibility Statement To the best of our knowledge, and in accordance with applicable accounting principles for interim financial reporting, the consolidated interim financial statements give a true and fair view of the net assets, financial position and results of operations of the Group, and the Group interim management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group over the remainder of the financial year. Koblenz, 5 November 2015 CompuGroup Medical Aktiengesellschaft The Management Board Frank Gotthardt Frank Brecher Uwe Eibich Christian B. Teig 25
CompuGroup Medical AG Maria Trost 21 56070 Koblenz Germany